The Local Zoo Has Hired You to Assist Them in Setting

question 55

Essay

The local zoo has hired you to assist them in setting admission prices. The zoo's managers recognize that there are two distinct demand curves for zoo admission. One demand curve applies to those ages 12 to 64, while the other is for children and senior citizens. The two demand and marginal revenue curves are:
PA = 9.6 - 0.08QA
MRA = 9.6 - 0.16QA
PCS = 4 - 0.05QCS
MRCS = 4 - 0.10QCS
where PA = adult price, PCS = children's/senior citizens' price, QA = daily quantity of adults, and QCS = daily quantity of children and senior citizens. Crowding is not a problem at the zoo, so that the managers consider marginal cost to be zero.
a. If the zoo decides to price discriminate, what are the profit maximizing price and quantity in each market? Calculate total revenue in each sub-market.
b. What is the elasticity of demand at the quantities calculated in (a) for each market. Are these elasticities consistent with your understanding of profit maximization and the relationship between marginal revenue and elasticity?

Understand the behavior of mixed costs and their impact on business operations.

Understand the concept of mixed costs and how to categorize costs into fixed and variable.

Apply the least-squares regression method to estimate cost formulas.

Prepare a budgeted income statement using the contribution format.

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Definitions:

Nurses

Trained professionals who provide care and support to patients in various settings, playing crucial roles in medical teams and healthcare delivery with responsibilities that include medical care, patient education, and health advocacy.

Objective Stance

A neutral, unbiased perspective that is not influenced by personal feelings or opinions in considering and representing facts.

Human Health Service

Organizations and resources dedicated to promoting, maintaining, or restoring health through the prevention and treatment of illness.

Helpful Activity

A helpful activity refers to any action undertaken to provide aid, support, or benefit to individuals or groups.